Lecture 8 Statement of Cash Flow 2

Lecture 8 Statement of Cash Flow 2 - Statement of Cash...

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Statement of Cash Flows (II) Review the adjustments to income that are required to derive cash from operations. Prepare a statement of cash flow. Understand how transactions affect financial statements
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Preparing (Indirect) SCF – ABC Corp B/S Year1 Year0 Cash 770 0 AR 20 0 Inv 80 0 PP&E 200 0 -Acc Dep -10 0 Total Asses 0 AP 40 0 OL 0 0 CS 1000 0 RE 40 0 Total Liabilities+OE I/S Sales Rev 60 -COGS -20 -Dep Exp -10 Interest incom 10 Net income 40 Prepare SCF for ABC Corp using BS and IS in year 1: Also knows that ABC pays out cash dividends $20 in year 1
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Statement of Cash Flows – ABC Corp Net Income 40 + Depreciation expense 10 - Increase in Accounts Receivable 20 - Increase in Inventory 80 + Increase in Accounts Payable 40 Total cash flow from operating activities -10 Cash flow from investing activities Purchase PPE -200 Total cash flow from investing activities -200 Cash flow from financing activities issuance of stock 1000 payment of dividend -20 Total cash flow from financing activities 980 Total cash flow in Year 1 770 Change in cash from Year 0 to Year 1 770
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SCF – how to treat gains and losses Ex. Sales of Property, Plant and Equipment (PPE) Suppose you sold a building for $1 million and
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This note was uploaded on 04/11/2009 for the course ACCT 410x taught by Professor Bonner during the Fall '06 term at USC.

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Lecture 8 Statement of Cash Flow 2 - Statement of Cash...

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